$4.9B Chemical Industry Merger

Rohm & Haas said Monday it's paying a 43 percent premium for shares of Morton International in a $4.9 billion cash and stock deal to buy the Chicago-based chemical company.

Rohm & Haas (ROH) will combine with Morton International (MII) to create a global specialty chemical company with combined revenue of $6.5 billion.

The deal, which includes assumption of $268 million of Morton debt, is seen as immediately accretive to Rohm & Haas's cash flow.

Shares of Morton jumped 9 5/8 to 35 1/2 on Monday morning. Rohm & Haas fell 1 5/16 to 29 11/16.

The deal adds international leadership positions in adhesives, specialty coatings, electronic materials and salt to Rohm & Haas' acrylic paints, floor polishers and semiconductor materials businesses.

Rohm & Haas is offering to buy Morton common stock at $37.13 per share, a 43 percent premium over Morton's Friday closing price of $25.88.

The combination, which will be accounted for as a purchase, is anticipated to be immediately accretive to cash flow and becomes accretive to earnings by the second year.

"The combined company will be a leader in high growth specialty chemicals," Rohm & Haas Chairman and CEO J. Lawrence Wilson said in a statement. "Morton's technology will add significant expertise in urethanes, powder coatings, plastic automotive coatings and inorganic chemistry."

Rohm and Haas, with $4 billion in annual sales, makes chemicals found in such products as decorative and industrial paints, semiconductors and shampoos.

Chicago-based Morton, whose products include salt, adhesives, dyes and electronic materials, had total annual sales of $2.5 billion for the fiscal year that ended June 30, 1998.